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Due diligence on corporate takeover of UK operator

Acquisition & Divestment

Project details

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ADIL’s client were considering a corporate takeover of an operator’s assets, personnel and offices.

The client had been assessing the potential acquisition for some time and had recently entered into an exclusivity agreement with the seller. This agreement had a short timeframe and in order to proceed with the acquisition they required a rapid assessment of the assets.

The package of assets ranged from those that were already in production to those that would start production in the near term and others that had not yet been sanctioned. This included over 80 wells, several undeveloped fields and a number of installations on the already producing assets. The seller’s stake in the majority of these assets was as non-operated partner, and operatorship of one of the assets that had yet to be sanctioned.

ADIL had a strong working relationship with the client and the client’s subsurface consultants, established through working together on previous due diligence projects.

ADIL assembled a cross discipline team, with functional capability from across ADIL, utilising the breadth of our experience and expertise. The team had extensive experience of delivering due diligence projects and some members of the team were selected due to their knowledge of these assets.

ADIL’s team brought together people with experience, knowledge and understanding of the geographical region and the assets in question. This allowed the ADIL team to bring real-life, current, in-depth knowledge of market conditions to the work.

ADIL and the client believe that it is critical to understand the key interlinked risks and missed opportunities that sit between the traditional silos of subsurface, drilling and wells and facilities. To address this, the team took an integrated approach to the assessment of assets, working closely with the client and the client’s subsurface consultants, recognising the crucial interface between the subsurface and facilities and joining together all the stages of field development and operation. The team added capability that the client did not have, and took on the role of technical experts, including for the field and concept development aspects.

ADIL took a view on the assets that were already operating, to determine if the costs associated with these were acceptable and could be supported. OPEX, CAPEX and drilling costs, production efficiency, proposed cost reductions and scheduled first oil dates for new projects were analysed and challenged. Project reports and benchmarking information from across the industry was also reviewed.

The team was mobilised within two days of initial request from client and delivered the initial project for of the client in four weeks. This was followed by a further four-week period supporting investment decision packages and lender queries. The ADIL team was dynamic and flexible, to ensure they interacted with a client who was working ‘24/7’. On many occasions, a quick response was needed, regardless of the time of day or night.

ADIL were able to provide the client with a very accurate and rapid assessment of the assets, which gave them a solid foundation to make an offer to purchase them. ADIL provided targeted and focused resources to support the client in developing credible estimates of CAPEX, OPEX and production efficiency to support the acquisition. Concepts and development schemes for the assets yet to be sanctioned were also provided.

ADIL provided data and analysis directly to the client’s banks and financial investors, presenting to them and answering questions in a face-to-face session. This direct interaction was crucial in gaining investor confidence and allowed ADIL to provide comfort from a commercial perspective.

Based on the outputs ADIL delivered, reserves based lending to purchase the assets was secured by the client.

The acquisition of the package of assets was completed in 2016.

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